NEW YORK Wall Street analysts have lowered expectations for U.S. corporate earnings in the first two quarters of 2008, after results for the fourth quarter showed conditions much worse than initially expected, according to a weekly survey by Reuters Estimates.
The survey of strategists and industry analysts showed they expect S&P 500 companies' first-quarter earnings to grow just 2.8 percent year-on-year in the first quarter and 3.5 percent in the second quarter, after falling 20.7 percent in the fourth quarter.
The outlook was gloomier than last week's expectations of first and second quarter earnings growth, respectively, of 3.8 percent and 4.2 percent, and a 17.6 percent fall in the fourth quarter.
The fourth-quarter estimate combines actual results from companies that have reported, and estimates for those that have not yet announced their numbers. Analysts expected 11.5 percent fourth-quarter earnings growth in an October 1 survey.
The survey has shown analysts are turning more wary week by week, and the latest result comes amid concerns over heavy bank losses and a prolonged downturn in the housing market.
The financial sector was seen showing the weakest performance in the fourth quarter, a 94 percent fall, amid reports of big write-downs and exposure to capital-strapped bond insurers.
For the full year, analysts forecast earnings in the financial sector to recover 21 percent in 2008 after falling 48 percent in 2007.
The technology sector was seen as the most resilient to the recent U.S. slowdown, with analysts expecting earnings growth of 23 percent in 2008 and 13 percent in 2007.
(Reporting by Ritsuko Ando; Editing by Richard Hubbard)